Predictions for procurement in 2022
Part of our job as a service provider is to think about the future of procurement, so that we build solutions to problems organisations don’t know they have yet. I want to share with you one major change we predict will occur over the next 10 years.
To predict the future, I’ve been thinking about what the origins of procurement are. Why has the procurement function come about?
And it strikes me that procurement exists because of corporate ignorance. 30 years ago, businesses didn’t know what they were spending, with which suppliers, from which parts of the business. They had no understanding of whether they were achieving value for money. There was no technology involved. There was no strategic sourcing process utilised. Indeed there was little in the way of theoretical understanding of the principles of procurement as we know it today. As long as the product or service arrived on time, the business, from a corporate perspective, didn’t care about the rest.
But then businesses started to care. And that is what created the Procurement function. It was a response to this ignorance, this lack of understanding. And what has resulted is a function whose actions have been defined by what needs to be done to resolve this ignorance. This has created the situation where too much time is spent on following a standard sourcing process. This is where much of the energies of today’s procurement function is focused. The default approach too frequently is to run a tender - and people mistakenly think that this will achieve the best result. When I talk to CPOs one thing they all agree on is that a large percentage of the their people's time is spent on tasks that they are over qualified for, but which much be done to execute procurement well.
So imagine a future where technology and processes have resolved this ignorance. Where full visibility has been achieved. Where your procurement professionals are armed with the right knowledge and IP they need, right at the start of the sourcing process. Where value for money has been assured on the deals that have been done. Where the business has full knowledge of not only what is going on internally within the organisation in real time, but also what is going on in the market. (And by the way, I believe this is achievable, and we are building our business to achieve it). Then this future state has very dramatic implications for the skills and competencies of tomorrow’s procurement professional.
The procurement professional in 2022 will therefore be spending the majority of their energy on business relationship management (i.e. on servicing the stakeholders’ needs), on the strategic development of cost management, on developing and delivering long term plans, on influencing the behaviours of people within the business, and on change management. In my opinion, that future can't come too soon. And we should be preparing ourselves and training our professionals today to get ready for this.
What are your procurement predictions for 2022?